Taking e might make a difference

The CBI has called on business and the government to work together to promote e-commerce as a potentially decisive factor in boosting the UK’s competitiveness.

The CBI has called on business and the government to work together to promote e-commerce as a potentially decisive factor in boosting the UK’s competitiveness and productivity.

The organisation’s director– general Digby Jones said no company, however small, could ignore the impact of trading online in an increasingly globalised economy.

Jones was speaking at the launch of The Quiet Revolution, one of the most comprehensive studies yet undertaken into the state of e-business in the UK. The CBI and KPMG Consulting, in association with the London Business School, quizzed around 1,000 companies of all sizes and sectors over their current electronic operations and what they expect the future to hold.

Major impact

Jones said the survey left no doubt that businesses expect the internet to have a major impact on the way they run their operations, and more than 90% are already addressing it in their corporate strategies.

More than half expect e-business to account directly for 10% or more of their revenue during the next three years.

Generally the UK could take satisfaction in its adoption and use of web-based technologies, with a record which compares favourably with major European economies.However, Jones warned that there was no room for complacency, citing India as an example of an emerging world power in IT and e-commerce. ‘I was amazed by how they are utterly geared towards doing business globally via e-commerce,’ he said.

‘What companies need to do is take e-commerce into every single aspect of their business and make it increase productivity,’ added Jones. ‘E-business is a true way to maintain a competitive advantage for the UK in a globalised economy.’

The CBI called for a ‘serious debate’ over the availability of high-speed broadband internet access. While welcoming the DTI’s recent proposals to secure broadband access throughout the UK, ministers were warned there is no time to lose.Nigel Hickson, the CBI’s head of e-business, said: ‘It is becoming clear that the demand for fast and affordable broadband will be there in two or three years. This report emphasises the urgency of getting the government’s proposals working.’

Potential alternatives

Potential inward investors to the UK, particularly from the US, will also look carefully at the broadband infrastructure here compared to potential alternatives on the European mainland.

Hickson added that The Quiet Revolution underlines the importance of having enough people with sufficient IT/e-business skills available to the UK economy.

‘If we are going to allow companies to fulfil their ambitions for e-business we are going to need the infrastructure there to support them,’ said Hickson.

…as manufacturing continues to lag behind

Manufacturing’s position at the rear rather than the vanguard of the e-business revolution is confirmed by the report.

As in previous similar studies, the sector is shown to be far behind industries such as telecoms, retail and financial services when it comes to the adoption of advanced web-based applications.

To measure an industry’s development, the report classified companies that responded to the survey as ‘e-pioneers’, ‘e-followers’ or ‘e-laggards’.

The pioneers are already using high-level web-based applications such as supply chain management and e-procurement, while the e-laggards will have barely advanced beyond e-mail. The followers are somewhere in between.

Of the seven sectors measured, manufacturing boasts the fewest e-pioneers at around 13% of companies, compared to almost half the businesses in the retail and telecoms sectors.

Manufacturing also accounts for the highest degree of laggards at more than 40%, although here the difference with other industries is less marked.

Future potential

However, the CBI said manufacturing’s current position at the rear of the pack should not be taken as a definitive guide to its future potential.

Director–general Digby Jones said the complexities and costs of implementing e-business in a manufacturing environment made it inevitable companies would move more slowly, but he pointed to a huge amount of good work already being done in the sector.

And looking three years down the line, manufacturers responding to the CBI/KPMG survey envisage e-business having a comparable impact to that in other, currently better developed, sectors.

The Quiet Revolution claims to explode the ‘myth’ that e-business is largely a phenomenon of southern England.

The biggest proportion of e-pioneers are located in the north east, Scotland, Wales and eastern England, although the south has most companies overall which are using e-business processes.

The report also raises interesting questions about the value to companies of the plethora of support agencies set up to help them embrace e-business by the government and regional bodies.

Asked where they turned for advice on their e-business strategy, by far the most popular choice of companies is their own business associates — whether customers, suppliers or even competitors.

The CBI said the government should take this on board and look at various ways ofbringing companies together to share their knowledge and experience.

This could particularly help small and medium-sized firms, which are most in need of support to get their e-business strategies off the ground.

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